With talk of a prepackaged bankruptcy swirling around CIT Group Inc., three potential bidders for its profitable factoring arm appear to have emerged.
Word surfaced July 16 that J.P. Morgan Chase was looking to acquire CIT’s factoring business, but a spokeswoman for J.P. Morgan declined comment.
If it makes a run at the CIT unit, the bank will face competition from GMAC Financial Services and W.L. Ross & Co., both of which are also said to be eyeing the factoring operation, according to investment bankers. GMAC does have a factoring business, while W.L. Ross does not, although chairman and chief executive officer Wilbur Ross said earlier this year that at some point his firm will likely acquire a financial institution. A spokeswoman for GMAC declined comment, while Ross could not be reached for comment.
The factoring arm of CIT finances at least $50 billion in wholesale inventory, and provides financing to about two-thirds of the fashion industry, sources said.
Many fashion firm advisers expect CIT’s factoring arm may find a new home.
Gilbert Harrison, chairman of investment banking firm Financo Inc., said, “The factoring assets are most valuable, and every day they lose more value since the clients are looking at more secure sources from other banks and factors.”
Victor Wahba, accounting partner at Weiser LLP, added, “CIT will need to be broken up. The commercial finance side will wind up somewhere intact.”
According to Michael Appel, managing director of Quest Turnaround Advisors, “A prepackaged restructuring is done out of court, with all the senior lenders locked up and other credit groups having prenegotiated certain issues before filing the bankruptcy court petition.”
Citing General Motors and Chrysler, Appel said prepacks, as they are called, are “looking increasingly successful. Companies don’t want to go into Chapter 11 and languish in court. With other bond payments due shortly after the planned Aug. 17 exchange, there may be a feeling that not enough restructuring of debt has been done.”
Meanwhile, many vendors have decided not to take any chances. Louis Cappelli, ceo of Sterling National Bank, said, “There are an awful lot of people seeking a new home.”
He added his bank has been “getting numerous calls in the last week to 10 days. We also have a very close relationship with many [accountants] who are in contact with us and who are instrumental in working with manufacturers and vendors.”
Cappelli said his bank has seen a wide range of potential new clients from small to large firms, many with strong balance sheets and some that are less so.
While his bank has a factoring operation and the capacity to take on new clients, he suggested that a CIT failure would cause some disruptions, as it “takes some time for water to seek its own level.”
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast